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28 Feb 2008 : Column 1272

Albert Owen: The hon. Lady paints a black picture of crime and justice in Wales. There are some good news stories, and she would realise that if she came to north Wales, especially north-west Wales, which has the highest detection rate in the United Kingdom. That is due to the extra investment in the police and in community support officers. Does she acknowledge that?

Mrs. Gillan: I was about to move on and cut out part of my speech because of the limited time available and the interventions that I have taken, but let me say that the hon. Gentleman is right about community support officers. I have been out on the beat with them in Wales and they make a tremendous contribution. I am grateful to the hon. Gentleman for mentioning that.

I am especially worried about the health service, not least because there seems to be an obsession with bureaucracy and targets. The Assembly Government have introduced 252 NHS targets, and I have to ask whether that has improved health care. However, I want to draw attention to a positive matter. Jonathan Morgan, the shadow Minister for Health and Social Services in the Assembly, is moving towards securing the first Back-Bench measure of the Assembly Government. The mental health reform legislative competence order, which will provide specific patient rights in mental health care, has been laid with the Assembly’s unanimous approval. I hope that that again shows the Secretary of State that Welsh Conservatives are leading the agenda, when they can, with practical policies for Wales, and I hope that he shares my wish that the measure reaches the statute book soon.

The Secretary of State mentioned the economic health of Wales, which is also crucial to its success. Sadly, after 10 years of a Labour Government, I do not perceive matters through the same rose-tinted spectacles as the right hon. Gentleman because Wales remains the poorest area of the United Kingdom. The recent Joseph Rowntree Foundation report showed that no progress had been made on tackling child poverty in recent years. Worklessness and economic inactivity still blight too many communities in Wales. The figures that I mentioned in my intervention on the Secretary of State mean that many of our children still grow up in families where no one has ever worked. The decline in manufacturing has also badly affected the country.

Lembit Öpik: The hon. Lady may be interested to learn that average gross weekly earnings in Wales are £472, compared with a UK average of £550. We are therefore a long way behind the national average.

Mrs. Gillan: The hon. Gentleman makes a valid point.

On an optimistic note, I recently had the great pleasure of visiting GE Healthcare just outside Cardiff. I hope that the Secretary of State will make time to visit that facility. Its headquarters is in my constituency in England, so I have a direct link with it. I was thrilled by its education project, which takes young people from schools into a laboratory to see how things work there. Unless we can enthuse people about maths, science, English and education generally, we will not have the skilled work force in Wales that we need to keep good companies of high worth with highly skilled jobs such as GE Healthcare.

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Wales is a fantastic country for natural resources for energy and for producing highly valuable energy. I hope that the Under-Secretary will reaffirm in his winding-up speech the attitude of the Wales Office to the plans for the Severn barrage. The right hon. Member for Neath was keen on the Severn barrage project and I tried to get him interested in tidal pools and lagoons. I hope that the Under-Secretary will take the opportunity to let us know whether the thinking and overwhelming support for the project remain the same because I want a slight shift of emphasis in the Department’s policy.

I congratulate Transco—I flew along the pipeline to see the completion of 115 miles of gas pipeline from the liquefied natural gas terminal in Milford Haven, in the constituency of my hon. Friend the Member for Preseli Pembrokeshire (Mr. Crabb). The project was delivered on time and on budget. To revert to an earlier subject, that company is also doing tremendous work to rehabilitate prisoners and has reduced reoffending rates in the groups of prisoners that it has helped into work from more than 70 per cent. to 7 per cent. I commend its work to the Secretary of State.

Our land in Wales is vital and our farmers are the natural guardians of our countryside. This year has been a tough year for farming, with the threat of foot and mouth and bluetongue hanging over many farmers. We have a proud agricultural tradition that needs Government support. It also needs the respect of Government, not the sort of cynical betrayal that resulted in a leaked copy of a Department for Environment, Food and Rural Affairs Minister’s speech, which promised compensation to Welsh farmers when there was a prospect of an imminent election, only for it to be withdrawn.

Will the Secretary of State meet me to discuss what we can do jointly to push for clearance for a product of sheep meat called “smokies”? There is a treatment of sheep meat called “smokies” that could make a real difference to the income of our sheep farmers, but the process of legalising it seems to be long and laborious. The Farmers Union of Wales has told me that the process could and should be speeded up, so that Welsh farmers wanting to earn a legitimate income will not lose out to illegal and possibly dangerous imports from overseas.

Mr. Paul Murphy: I should be happy to meet the hon. Lady to discuss what seems to be a very important issue.

Mrs. Gillan: I am most grateful for that positive intervention.

To conclude, I see Wales as poised at a crossroads. For many years, Labour blamed any problem in Wales on the Tories but now, after 10 years of a Labour Government, there is nowhere to hide. The Secretary of State has entered his post at a time when standards in schools are low, crime is rising, prisons are overflowing, taxes are rising and manufacturing jobs are falling, and when we have burgeoning hospital waiting lists. Labour said that things could only get better, but that has not proved to be the case.

Conservatives have been building their support steadily, winning and providing a growing alternative to Labour and now the new Labour-Plaid Government in the Assembly. I want Wales to share the hope and
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optimism, which was referred to earlier, that is evident in the fantastic performance of our rugby team in the six nations tournament. I will join the Secretary of State in wishing the team well this St. David’s day, and I believe that they are going to win.

Our party has increased its votes at every election since 1999. We offer the hope and optimism that Wales deserves. We are fighting more seats than ever before in local elections throughout Wales. I hope that we can build on our success. I believe that we offer the alternative to the right hon. Gentleman’s Government. When it comes to the local elections, I hope that people will look closely at our candidates and give us a chance to prove it.

Several hon. Members rose

Madam Deputy Speaker: Order. May I remind all right hon. and hon. Members that Mr. Speaker has imposed a 15-minute limit on Back-Bench contributions?

1.32 pm

Mr. Peter Hain (Neath) (Lab): May I say how delighted I am to see you, Madam Deputy Speaker, as a great Welsh woman presiding over this debate? May I also express my gratitude to my right hon. Friend the Secretary of State for what he said about me? I congratulate him on getting the job, despite the surreal, nightmarish circumstances in which I left it. I cannot think of anyone whom I would more like to see holding the post. I replaced him in Wales and in Northern Ireland, and now he has replaced me in Wales. Things are becoming almost politically incestuous. I am also grateful to the hon. Member for Chesham and Amersham (Mrs. Gillan), who has always shown great decency in all the jobs that we have worked on together.

Over the past 11 years, the Welsh economy has been transformed, because of the energy, innovation and dynamism of Welsh businesses, and the skill and hard work of Welsh women and men, combined with the unprecedented annual rises in public investment and economic stability ensured by our Government. Economically and culturally, Wales has enjoyed a renaissance, after the grim decades of mass unemployment and business failure. We should all celebrate that because, working together, we—our Labour Governments in Westminster and Cardiff, business and all Welsh employees—have made it possible for Wales to walk tall with a spring in our step.

However, we are still nothing like where we should be to compete with the competition from eastern and central Europe, let alone from the emerging Asian economies and especially our new global economic partners and the superpowers of the future, China and India—countries of more than 2 billion people, producing 5 million new university graduates a year, two thirds of whom are graduates in science, technology, and information and communications technology. The central challenge that we face is to transform the Welsh economy by building a much bigger private sector. Unless we do that, we will not be able to achieve the world class success that Wales is capable of and deserves.

If I may say so, Madam Deputy Speaker, I have set out these ideas and the argument in more detail on my website, They will also be published as an internet pamphlet, at

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One of the elements essential to Wales’s success to date has been the huge real-terms rises in public investment, with the Welsh budget increasing to almost £16 billion by 2011, some 130 per cent. higher in cash terms than in 1997. But that era is coming to an end. Britain has never had a period of such long and consistent steeply rising public spending. However, that cannot continue without unbalancing the economy, causing a return to the instability, high inflation and high interest rates that we inherited from the Conservatives and that plagued all British Governments for a generation and more. That is why the next comprehensive spending review period, from 2008 to 2011, will still see real-terms increases in public investment, but at a lower rate.

That poses challenges for the Welsh Assembly Government, because their entire life has so far been spent under the umbrella of unparalleled real-terms budget increases. From now on, the kind of efficiency measures and reforms that Minister for Finance Andrew Davies is rightly insisting upon will be needed to reduce inefficiency and bureaucracy, and release funds significantly to improve front-line services. It will also be necessary to exercise much tougher choices over priorities.

Those who claim that the Government’s public spending programme has inhibited the growth of the private sector are wrong. Huge public investment in private construction, for example, has stimulated it, while five times more Welsh private sector jobs have been created in the past 11 years than in the public sector. There are many other sectors in which Welsh businesses have themselves benefited and created Welsh jobs by providing services or selling products to the Welsh public sector on the back of rising spending since 1997. That is a stark contrast with the economic instability and public spending cuts experienced from 1979 to 1997, when huge numbers of Welsh businesses went bankrupt and unemployment soared.

However, according to the Library, estimates show that public spending in Wales is equivalent to 59 per cent. of gross domestic product. The figure for Wales is higher than any other part of the UK except Northern Ireland, where it is 64 per cent., although the figure in north-east England is similar. The equivalent estimate for Scotland is about 50 per cent., while the UK average is about 44 per cent. Wales’s ratio of public spending to GDP is broadly similar to, or perhaps slightly higher than, the highest ratio among OECD countries. In Wales, 23.7 per cent. of employees are in the public sector, compared with the UK average of 20.2 per cent. Again, that is similar to the figure for the north-east, but lower than the figure for Northern Ireland, at 29.1 per cent. All other areas of the UK have lower shares of public sector employment.

Public spending is high partly to correct the legacy of historically high levels of relative deprivation, of sparsity, of geographic remoteness, and of the ill health that is a legacy of Wales’s industrial heritage, especially mining. Moreover, our Government have, rightly, been deliberately moving public jobs from the overheated south-east to Wales.

The argument that I make is therefore emphatically not for the cuts in public spending so beloved of the right, still less that the public sector in Wales is too big.
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Indeed, I am arguing the exact opposite. The real issue is that the private sector is too small. If both Welsh living standards and the economic competitiveness that underpins our prosperity are to grow as we all want, the private sector needs to grow significantly and at a relatively much faster rate. To achieve at least equilibrium with the rest of the UK and the OECD countries, Wales must move towards a private sector of around 55 per cent. of Welsh GDP. To achieve that in the next 15 to 20 years, we will need year-on-year growth that is around 1 per cent. faster than the UK average—no mean feat.

It is no good simply leaving the task of catch-up to market forces and the private sector, as the right insists. They have a critical role to play, of course, but so does the Government in London and Cardiff, by targeting public investment not only on the “soft” side of public spending—that is, on care and services—but on the “sharp” side, on skills, infrastructure, technology, research and entrepreneurialism. At the height of the industrial revolution 150 years ago, Wales had in Merthyr Tydfil what was considered the most technologically advanced town on the planet, with the most productive ironworks in the world and the development of the first rail engine. We now need new Merthyrs for this century, leading the way in the new technologies of the future.

Although we need higher labour productivity, Wales cannot and should not try to compete on cheaper labour costs, with China and India, for example, paying manufacturing workers just 60p an hour. As Rhodri Morgan has so eloquently said—and as the Secretary of State repeated—the Wales of the future will be a “small but clever country”, with private sector growth in the right areas, and raised levels of educational attainment, skills and innovation to add value. At present, although Welsh spending on research and development is rising, it remains too low, and this must be addressed urgently, with ever closer partnership between—and ever more targeted spending by—the Governments at Westminster and Cardiff, our universities, colleges and Welsh businesses.

Our vision is for a Wales that acts as a centre where companies can innovate in partnership with our educational institutions. I identify seven immediate priorities. First, we must secure graduate retention, develop technical skills and inspire entrepreneurship from school upwards. Secondly, we must make tough public spending decisions, with a moratorium on handouts and a switch to supporting greater competitiveness. Thirdly, we must compete in the high added-value areas such as financial services, electronics, nanotechnology, biosciences, molecular mechanics and information and communications technology, with many more start-ups and high-tech businesses. Fourthly, we must support vital new energies, including renewables and biofuels. Fifthly, we need to support our economy with a welfare system that gets people off benefit and into work, and provides our work force with the skills that they need to progress in employment. Sixthly, we need to ensure that we have a political, economic and social culture in Wales that is truly internationalist. Finally, we need smarter government, local and national, with a more dynamic Welsh public service.

Universities need to be at the heart of our economic growth. And that can be done, as Singapore, a country roughly the same size as Wales, has demonstrated: on a per capita income basis, it is now one of the top 20 countries in the world. Our universities are already
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making a significant contribution to business, and substantial increases in the Government’s science and innovation budgets are enabling them to improve this still further, as I have seen myself during visits to Cardiff, Swansea and Bangor universities, for example.

David T.C. Davies: Will the right hon. Gentleman give way?

Mr. Hain: No, I will not give way to the hon. Gentleman. I will give way to Members on both sides of the House who have treated me with decency over the past few weeks.

I have also visited the North East Wales institute of higher education—NEWI—in Wrexham, and I look forward to its getting its university status. The emergence of techniums throughout Wales is hugely important in exploiting the talents of Welsh graduates to enable them to start up new companies, and in providing excellence for the knowledge economy that is our future with new, world-class employment opportunities for young skilled people, whether from Wales or elsewhere, especially in growing and important areas such as financial services, nanotechnology, biosciences and ICT.

By inspiring our young people, we can add to the natural desire to succeed that is already there. The Government need to prioritise funding to enable our universities, colleges and schools to provide much better foundations and opportunities for these potential business men and women of tomorrow, to enable them to go on to realise their aspirations.

Mrs. Betty Williams: Would my right hon. Friend acknowledge that, as part of the equation on which he is focusing, European convergence funding has been extremely important in creating tremendous opportunities for the economy and job creation? He played a great part in that in the early days, when he was a Minister in the then Welsh Office, when we managed to get Conwy and Denbighshire on the objective 1 map, having previously failed to do so.

Mr. Hain: I am grateful to my hon. Friend. She was one of those who most articulately persuaded me to extend the boundaries when I was in the old Welsh Office.

Wales has an abundance of natural resources, with a coastline and landscape that lends itself to a variety of offshore and onshore wind and other renewable energy developments, including wave and tidal. The Government are moving forward with a feasibility study into the potential for a barrage across the Severn estuary that would generate fully 5 per cent. of UK electricity needs. It would be the biggest renewable energy project by some distance on our island, creating tens of thousands jobs, first in construction, then permanently.

Lembit Öpik: I am grateful to the right hon. Gentleman for giving way, and I should like to praise him on his time in the Wales Office. There is a meeting on wind power tomorrow evening in Trefeglwys, one of my local communities. Does he agree that it is important to take local considerations into account and that, if there are strong feelings either for or against a wind construction in a local community, they should be taken into account in the planning process? In the past, the feelings of the community have not been considered in that way.

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